Top stock recommendations for the week starting January 20, 2025

Stock market recommendations: According to Motilal Oswal Financial Services Ltd, the top stock picks for the week (starting January 20, 2025) are Shriram Finance and Bharat Electronics. Let’s take a look:

Stock Name Rating CMP (Rs) Target (Rs) Upside (%)

Shriram Finance Buy 527 700 33%

BEL Buy 282 360 28%

Shriram Finance’s diversified product suite helped it mitigate the CV business cyclicality, strategically positioning the company for a balanced loan mix and a healthier asset quality then its peers. SHFL has sold its housing finance subsidiary to Warburg Pincus for ₹39b, expecting post-tax exceptional gain of ₹13b. This could enhance balance sheet strength & support a credit rating upgrade. We expect SHFL to deliver a PAT CAGR of ~19% and RoA/RoE of 3.3%/17% by FY27E by utilizing its under-tapped expanded distribution network and cross-selling to reach new customers, introduce products and build a foundation for sustainable growth.

Bharat Electronics:

Bharat Electronics is well-positioned to benefit from defense indigenization with upcoming platform orders like QRSAM, MRSAM, & Tejas Mk1A, with DAC approvals boosting sector focus. A robust order book of ₹746 billion provides strong revenue visibility, supported by stable margins, controlled working capital, & ongoing efforts to increase export & non-defense contributions. We expect revenue to grow at a 17% CAGR over FY24-27, driven by market share gains, SBUs expansion, export focus, and strong defense execution, supported by a ₹110b cash surplus.

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